"All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies", said Warren Buffet, reminding us that patience and discipline are key to successful investing. Stocks quietly climbing to new 52-week highs could be a sign that the market is recognizing consistent performance, strong fundamentals, or upcoming catalysts.The following are some of the stocks that hit new 52-week highs yesterday. Do you already own any of them? Are any on your watchlis ...

SOUTH ORANGE, N.J., Oct. 08, 2025 (GLOBE NEWSWIRE) -- Nephros, Inc. (Nasdaq: NEPH), a leading water technology company providing filtration solutions to medical and commercial markets, today announced the launch of its new filter designed to reduce Total PFAS, or per- and polyfluoroalkyl substances (PFAS), in potable water. This product expands Nephros’ portfolio to address a category of chemical contaminants that have drawn growing regulatory and public health attention. PFAS, sometimes referred to as “for ...

Two of the fastest-moving stocks in Barchart’s Top 100 Stocks to Buy in Monday trading were Kopin (KOPN) and Nephros (NEPH), up 60 and 52 positions, respectively, landing in the 40th and 48th positions. I’ll be honest, I’ve never heard of either of these companies, but they’re fast-moving, and in this market, that’s about the only thing that counts right now. More News from Barchart New to the top 100, Kopin’s stock is up 62% in the past month and 163% in 2025, entering the list at a higher position tha ...

[Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) [Q2 2025 Highlights](index=1&type=section&id=Q2%202025%20Highlights) Nephros achieved **third consecutive quarter of profitability** in Q2 2025, with **net revenue up 36%** year-over-year Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | Change (%) | | :------------------- | :------ | :------ | :--------- | | Net Revenue | $4.4M | $3.3M | 36% | | Net Income (Loss) | $237K | ($289K) | N/A | | Adjusted EBITDA | $355K | ($133K) | N/A | - Achieved **third consecutive quarter of profitability**[3](index=3&type=chunk) - Programmatic sales reached an **all-time high**, supported by a new installation and replacement program driving reliable reorder volume[3](index=3&type=chunk) - Dialysis water segment delivered its **second-highest performance on record**, securing the **largest dialysis filtration purchase order in company history**[3](index=3&type=chunk) [YTD June 30, 2025 Highlights](index=1&type=section&id=YTD%20June%2030%2C%202025%20Highlights) Nephros showed **significant YTD growth**, with **net revenue up 37%** and a shift to **positive net income** YTD June 30, 2025 Key Financial Metrics | Metric | YTD 2025 | YTD 2024 | Change (%) | | :------------------- | :------- | :------- | :--------- | | Net Revenue | $9.3M | $6.8M | 37% |\ | Net Income (Loss) | $795K | ($458K) | N/A |\ | Adjusted EBITDA | $1.0M | ($228K) | N/A | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO highlighted **disciplined execution** and **innovation** driving growth in programmatic business and active sites - Results reflect **disciplined execution**, operational excellence, and consistent investment in growth-driving innovation[3](index=3&type=chunk) - **Trailing 12-month revenue grew from $13.8 million to $16.7 million** over the past two years[3](index=3&type=chunk) - **Active-site counts reached all-time highs** across infection control, dialysis water, and commercial segments[3](index=3&type=chunk) [Detailed Financial Performance](index=2&type=section&id=Detailed%20Financial%20Performance) [Three Months Ended June 30, 2025](index=2&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025) Nephros reported **significant Q2 revenue growth** and **improved profitability**, driven by programmatic sales [Net Revenue](index=2&type=section&id=Net%20Revenue%20(Q2)) Q2 2025 Net and Programmatic Revenue | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--------- | :------ | :------ | :--------- | | Net Revenue | $4.4M | $3.3M | 36% | | Programmatic Revenue | N/A | N/A | 31% | - **Core programmatic revenue grew by 31% year-over-year**, reflecting strong reorders and new active sites[6](index=6&type=chunk) [Cost of Goods Sold & Gross Margin](index=2&type=section&id=Cost%20of%20Goods%20Sold%20%26%20Gross%20Margin%20(Q2)) Q2 2025 Cost of Goods Sold and Gross Margin | Metric | Q2 2025 | Q2 2024 | Change (%) | | :---------------- | :------ | :------ | :--------- | | Cost of Goods Sold | $1.6M | $1.3M | 21% | | Gross Margin | 63% | 59% | +4 ppts | - Increase in gross margin primarily driven by a **reduction in shipping costs and inventory reserve adjustments**[7](index=7&type=chunk) [Operating Expenses](index=2&type=section&id=Operating%20Expenses%20(Q2)) Q2 2025 Operating Expenses | Expense Category | Q2 2025 | Q2 2024 | Change (%) | | :----------------------- | :------ | :------ | :--------- | | Selling, General & Admin | $2.2M | $1.9M | 13% | | Research & Development | $0.3M | $0.3M | 0% | | Depreciation & Amortization | $35K | $34K | 3% | - Increase in SG&A due to **higher sales commissions from increased revenue, higher employee bonus accruals, and increased stock-based compensation**[8](index=8&type=chunk) [Net Income & Adjusted EBITDA](index=2&type=section&id=Net%20Income%20%26%20Adjusted%20EBITDA%20(Q2)) Q2 2025 Net Income and Adjusted EBITDA | Metric | Q2 2025 | Q2 2024 | | :---------------- | :------ | :------ | | Net Income (Loss) | $0.2M | ($0.3M) | | Adjusted EBITDA | $0.4M | ($0.1M) | - **Achieved net income for the third consecutive quarter**, a significant improvement from a net loss in the prior year[9](index=9&type=chunk) [Six Months Ended June 30, 2025](index=2&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025) Nephros sustained **strong YTD performance**, with **substantial revenue growth** and a shift to **profitability** [Net Revenue](index=2&type=section&id=Net%20Revenue%20(YTD)) YTD June 30, 2025 Net and Programmatic Revenue | Metric | YTD 2025 | YTD 2024 | Change (%) | | :--------- | :------- | :------- | :--------- | | Net Revenue | $9.3M | $6.8M | 37% | | Programmatic Revenue | N/A | N/A | 27% | - **Core programmatic revenue grew by 27% year-over-year**, driven by strong reorders and new active sites[11](index=11&type=chunk) [Cost of Goods Sold & Gross Margin](index=2&type=section&id=Cost%20of%20Goods%20Sold%20%26%20Gross%20Margin%20(YTD)) YTD June 30, 2025 Cost of Goods Sold and Gross Margin | Metric | YTD 2025 | YTD 2024 | Change (%) | | :---------------- | :------- | :------- | :--------- | | Cost of Goods Sold | $3.3M | $2.7M | 25% | | Gross Margin | 64% | 61% | +3 ppts | - Increase in gross margin primarily driven by **lower product costs from a more favorable product mix and a reduction in inventory reserve adjustments**[12](index=12&type=chunk) [Operating Expenses](index=2&type=section&id=Operating%20Expenses%20(YTD)) YTD June 30, 2025 Operating Expenses | Expense Category | YTD 2025 | YTD 2024 | Change (%) | | :----------------------- | :------- | :------- | :--------- | | Selling, General & Admin | $4.5M | $4.1M | 9% | | Research & Development | $0.6M | $0.5M | 20% | | Depreciation & Amortization | $74K | $67K | 10% | - Increase in SG&A primarily driven by **higher sales commission expense, increased employee bonus accruals, and higher stock-based compensation expense**[12](index=12&type=chunk) [Net Income & Adjusted EBITDA](index=3&type=section&id=Net%20Income%20%26%20Adjusted%20EBITDA%20(YTD)) YTD June 30, 2025 Net Income and Adjusted EBITDA | Metric | YTD 2025 | YTD 2024 | | :---------------- | :------- | :------- | | Net Income (Loss) | $0.8M | ($0.5M) | | Adjusted EBITDA | $1.0M | ($0.2M) | [Cash and Cash Equivalents](index=3&type=section&id=Cash%20and%20Cash%20Equivalents%20(YTD)) Cash and Cash Equivalents | Metric | June 30, 2025 | Dec 31, 2024 | | :---------------------- | :------------ | :----------- | | Cash and Cash Equivalents | $5.1M | $3.8M | - **Company remains debt-free** as of June 30, 2025[15](index=15&type=chunk) [Non-GAAP Financial Measures Reconciliation](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) [Adjusted EBITDA Definition](index=3&type=section&id=Adjusted%20EBITDA%20Definition) Adjusted EBITDA is a **non-GAAP measure** used to assess financial trends, excluding non-cash and non-recurring items - **Adjusted EBITDA is calculated by excluding interest, tax, non-recurring expenses/income, and non-cash items (depreciation, amortization, non-cash inventory write-offs, non-cash compensation) from GAAP net income (loss)**[16](index=16&type=chunk) - Management presents Adjusted EBITDA in connection with net income (loss) and urges investors **not to rely on it in isolation due to its inherent limitations**[20](index=20&type=chunk) [Adjusted EBITDA Reconciliation (Three Months)](index=3&type=section&id=Adjusted%20EBITDA%20Reconciliation%20(Three%20Months)) Reconciliation of **Q2 net income (loss) to Adjusted EBITDA**, detailing various adjustments Adjusted EBITDA Reconciliation (Three Months) | (in $ thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | | Net income (loss) | 237 | (289) | | Adjustments: | | | | Depreciation of property and equipment | 13 | 11 | | Amortization of other assets | 20 | 24 | | Interest expense | 1 | - | | Interest income | (31) | (21) | | Income taxes | 9 | - | | Non-cash stock-based compensation | 71 | 35 | | Non-cash inventory impairments | 35 | 107 | | **Adjusted EBITDA Income (loss)** | **355** | **(133)** | [Adjusted EBITDA Reconciliation (Six Months)](index=4&type=section&id=Adjusted%20EBITDA%20Reconciliation%20(Six%20Months)) Reconciliation of **YTD net income (loss) to Adjusted EBITDA**, detailing various adjustments Adjusted EBITDA Reconciliation (Six Months) | (in $ thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net Income (loss) | 795 | (458) | | Adjustments: | | | | Depreciation of property and equipment | 30 | 22 | | Amortization of other assets | 43 | 47 | | Interest expense | 1 | 1 | | Interest income | (44) | (46) | | Income taxes | 9 | - | | Non-cash stock-based compensation | 147 | 26 | | Non-cash inventory impairments | 41 | 180 | | **Adjusted EBITDA Income (loss)** | **1,022** | **(228)** | [Company Information](index=4&type=section&id=Company%20Information) [Conference Call Information](index=4&type=section&id=Conference%20Call%20Information) Nephros hosted a conference call to discuss **financial results and business overview**, with replay options - **Conference call held on August 7, 2025, at 4:30 PM ET**[21](index=21&type=chunk) - **Audio archive available on Nephros Investor Relations page; replay accessible until August 15, 2025**[22](index=22&type=chunk) [About Nephros](index=5&type=section&id=About%20Nephros) Nephros, Inc. is a **water technology company** offering filtration products and education for healthcare and commercial markets - **Committed to improving the human relationship with water through leading, accessible technology**[23](index=23&type=chunk) - **Offers innovative water filtration products and services, and water-quality education**[23](index=23&type=chunk) - **Serves healthcare and commercial markets with proactive and emergency water management solutions**[23](index=23&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section outlines **risks and uncertainties** that could cause actual results to differ from forward-looking statements - **Statements regarding future revenue growth, product reorders, operational activities, and ability to realize net income are subject to risks**[25](index=25&type=chunk) - **Actual results could differ due to factors like sales organization development, emergency response sales, U.S. tariffs, inflation, competition, capital availability, dependence on third parties, and regulatory reforms**[25](index=25&type=chunk) - **Investors are cautioned not to place undue reliance on forward-looking statements, and the company does not undertake to update them except as required by law**[25](index=25&type=chunk) [Investor Relations Contacts](index=5&type=section&id=Investor%20Relations%20Contacts) Contact information for **investor relations inquiries**, including PCG Advisory and Nephros representatives - **Kirin Smith, President of PCG Advisory, Inc., and Robert Banks, CEO of Nephros, Inc., are listed as investor relations contacts**[26](index=26&type=chunk) [Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) [Balance Sheets](index=6&type=section&id=Balance%20Sheets) Unaudited balance sheets show **increased assets and equity**, with a **healthy cash position and no debt** Consolidated Balance Sheet Highlights | ASSETS (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $5,074 | $3,760 | | Total current assets | $9,578 | $8,298 | | TOTAL ASSETS | $12,243 | $11,210 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | Total current liabilities | $1,772 | $1,562 | | TOTAL LIABILITIES | $2,644 | $2,625 | | TOTAL STOCKHOLDERS' EQUITY | $9,599 | $8,585 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $12,243 | $11,210 | - **Cash and cash equivalents increased by $1.314 million from December 31, 2024, to June 30, 2025**[28](index=28&type=chunk) - **Accumulated deficit decreased from ($144,332) thousand to ($143,537) thousand, reflecting improved profitability**[30](index=30&type=chunk) [Statements of Operations](index=7&type=section&id=Statements%20of%20Operations) Unaudited statements highlight **significant revenue growth** and a shift to **net income** for both periods Statements of Operations (Three Months) | (in thousands, except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total net revenues | $4,419 | $3,252 | $9,296 | $6,774 | | Cost of goods sold | $1,624 | $1,340 | $3,347 | $2,675 | | Gross margin | $2,795 | $1,912 | $5,949 | $4,099 | | Total operating expenses | $2,547 | $2,229 | $5,135 | $4,616 | | Operating income (loss) | $248 | ($317) | $814 | ($517) | | Net income (loss) | $237 | ($289) | $795 | ($458) | | Net income (loss) per common share, basic | $0.02 | ($0.03) | $0.07 | ($0.04) | - **Product revenues were the primary driver of total net revenues, showing strong growth in both periods**[32](index=32&type=chunk) - **Gross margin improved from 59% to 63% for the quarter and from 61% to 64% for the six-month period**[7](index=7&type=chunk)[12](index=12&type=chunk)

Financial Data and Key Metrics Changes - The trailing twelve-month revenue increased from $13.8 million to $16.7 million, reflecting a strong growth trajectory [5] - Net revenue for Q2 reached $4.4 million, up 36% compared to Q2 2024, marking the third consecutive quarter of profitability [6][9] - For the first half of 2025, revenue increased by 37% to $9.2 million from the prior year period [12] - Gross margins improved to 63% in Q2 2025 from 59% in Q2 2024, driven by reduced shipping costs and inventory reserve adjustments [10] - Net income for Q2 was $237,000, compared to a net loss of $289,000 in the same period last year [11] - Adjusted EBITDA for Q2 was positive $355,000, compared to a loss of $133,000 during the same period in 2024 [11] Business Line Data and Key Metrics Changes - The core programmatic business experienced a 40% compound growth over the past two years [7] - Protonight sales reached all-time highs, indicating the effectiveness of the recurring revenue model [7] - Active customer sites grew to over 1,600 as of June 30, 2025, slightly higher than March 31, 2025 [10] Market Data and Key Metrics Changes - Every region outperformed its first-half targets, reinforcing the resilience and scalability of the business [6] - The company is focusing on expanding into underserved verticals such as dental, government, and municipal facilities [8] Company Strategy and Development Direction - The company aims to bring new innovations to market, including the S100 micro filter and 20-inch Hydro Guard, unlocking opportunities across various sectors [8] - The strategic expansion of the sales team into non-healthcare verticals has begun to yield positive results [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of growth, attributing it to a combination of initiatives including the filter tracking app and enhanced service capabilities [20][22] - The company is focused on maintaining operational discipline while continuing to protect profitability [8] Other Important Information - Research and development expenses increased to $311,000 in Q2 2025 due to higher headcount [10] - Sales, general, and administrative expenses rose by 13% to $2.2 million, driven by higher sales commissions and employee bonuses [11] Q&A Session Summary Question: What initiatives contributed to the growth in customer retention and active sites? - Management attributed growth to a combination of the filter tracking app, service capabilities, and a focused sales team that enhances customer relationships [20][22] Question: Is the current sales force sufficient to pursue growth in new verticals? - Management acknowledged the need for an expanded sales force to effectively cover both existing customers and pursue new opportunities in different verticals [24][26]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited).) Presents Nephros, Inc.'s unaudited condensed interim financial statements and notes for Q2 and H1 2025 and 2024 [Condensed Balance Sheets](index=4&type=section&id=CONDENSED%20BALANCE%20SHEETS%20%E2%80%93%20June%2030%2C%202025%20and%20December%2031%2C%202024) | ASSETS (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :------------------ | | Cash and cash equivalents | $5,074 | $3,760 | | Accounts receivable, net | $2,040 | $1,781 | | Inventory | $2,237 | $2,615 | | Total current assets | $9,578 | $8,298 | | TOTAL ASSETS | $12,243 | $11,210 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Accounts payable | $632 | $649 | | Accrued expenses | $771 | $565 | | Total current liabilities | $1,772 | $1,562 | | TOTAL LIABILITIES | $2,644 | $2,625 | | TOTAL STOCKHOLDERS' EQUITY | $9,599 | $8,585 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $12,243 | $11,210 | [Condensed Statements of Operations](index=5&type=section&id=CONDENSED%20STATEMENTS%20OF%20OPERATIONS%20%E2%80%93%20Three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) | (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total net revenues | $4,419 | $3,252 | $9,296 | $6,774 | | Gross margin | $2,795 | $1,912 | $5,949 | $4,099 | | Operating income (loss) | $248 | $(317) | $814 | $(517) | | Net income (loss) | $237 | $(289) | $795 | $(458) | | Net income (loss) per common share, basic | $0.02 | $(0.03) | $0.07 | $(0.04) | | Net income (loss) per common share, diluted | $0.02 | $(0.03) | $0.07 | $(0.04) | [Condensed Statements of Changes in Stockholders' Equity](index=6&type=section&id=CONDENSED%20STATEMENTS%20OF%20CHANGES%20IN%20STOCKHOLDERS%27%20EQUITY%20%E2%80%93%20Three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) | (in thousands, except share amounts) | Balance, Dec 31, 2024 | Net Income (Q1 2025) | Issuance of vested restricted stock | Stock-based compensation | Balance, Mar 31, 2025 | Net Income (Q2 2025) | Cashless stock option exercises | Stock-based compensation | Balance, Jun 30, 2025 | | :----------------------------------- | :-------------------- | :------------------- | :---------------------------------- | :----------------------- | :-------------------- | :------------------- | :------------------------------ | :----------------------- | :-------------------- | | Common Stock Shares | 10,544,691 | - | 55,659 | - | 10,600,350 | - | 254 | - | 10,600,604 | | Common Stock Amount | $11 | - | - | - | $11 | - | - | - | $11 | | Additional Paid-in Capital | $152,906 | - | $82 | $66 | $153,054 | - | - | $71 | $153,125 | | Accumulated Deficit | $(144,332) | $558 | - | - | $(143,774) | $237 | - | - | $(143,537) | | Total Stockholders' Equity | $8,585 | $558 | $82 | $66 | $9,291 | $237 | - | $71 | $9,599 | [Condensed Statements of Cash Flows](index=7&type=section&id=CONDENSED%20STATEMENTS%20OF%20CASH%20FLOWS%20%E2%80%93%20Six%20months%20ended%20June%2030%2C%202025%20and%202024) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $795 | $(458) | | Net cash provided by (used in) operating activities | $1,316 | $(1,173) | | Net cash used in investing activities | $- | $(50) | | Net cash used in financing activities | $(2) | $(4) | | Net increase (decrease) in cash and cash equivalents | $1,314 | $(1,227) | | Cash and cash equivalents, end of period | $5,074 | $3,080 | [Notes to Condensed Interim Financial Statements](index=8&type=section&id=NOTES%20TO%20CONDENSED%20INTERIM%20FINANCIAL%20STATEMENTS) [Note 1 – Organization and Nature of Operations](index=8&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20Nature%20of%20Operations) Nephros, Inc., founded in 1997, transitioned from ESRD therapy to high-performance liquid purification filters for medical and commercial markets - Nephros, Inc. was incorporated on April 3, 1997, initially focusing on advanced end-stage renal disease (ESRD) therapy technology[18](index=18&type=chunk) - Since 2009, the Company's primary business shifted to **high-performance liquid purification filters** for hospital infection prevention and dialysis centers[19](index=19&type=chunk) - Nephros also sells water filtration products for commercial applications, targeting the **hospitality and food service markets**[19](index=19&type=chunk) [Note 2 – Basis of Presentation and Liquidity](index=8&type=section&id=Note%202%20%E2%80%93%20Basis%20of%20Presentation%20and%20Liquidity) Interim financial statements are unaudited and GAAP-compliant, with Nephros operating as a single segment, achieving positive net income and cash flow despite an accumulated deficit - Unaudited condensed interim financial statements are prepared in accordance with **GAAP** for interim financial information and Form 10-Q instructions[21](index=21&type=chunk) - The Company operates in **one business segment**[23](index=23&type=chunk) - Nephros generated **net income and positive cash from operations** for Q2 and H1 2025, with current cash balances deemed sufficient for the next 12 months, despite an accumulated deficit of **$143.5 million**[25](index=25&type=chunk) Major Customer Revenue Concentration | Customer | Q2 2025 Revenue % | Q2 2024 Revenue % | H1 2025 Revenue % | H1 2024 Revenue % | | :------- | :---------------- | :---------------- | :---------------- | :---------------- | | A | 25% | 22% | 22% | 27% | | B | 14% | 8% | 12% | 7% | | Total | 39% | 30% | 34% | 34% | [Note 3 – Revenue Recognition](index=10&type=section&id=Note%203%20%E2%80%93%20Revenue%20Recognition) Product sales revenue is recognized at shipment, while other revenues follow ASC 606's five-step model, allocating revenue for multiple deliverables based on standalone selling prices - Revenue from product sales is recognized at a **point-in-time upon shipment**, net of variable consideration[32](index=32&type=chunk) - Royalty, service, and other revenues are recognized using the **ASC 606 five-step model** when sales occur or performance obligations are satisfied[33](index=33&type=chunk) - For multiple deliverables, revenue is allocated based on **relative standalone selling price**, prioritizing observable inputs[34](index=34&type=chunk) Service, Royalty, and Other Revenues | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $108 | $44 | $279 | $60 | [Note 4 – Fair Value Measurements](index=11&type=section&id=Note%204%20%E2%80%93%20Fair%20Value%20Measurements) Financial instruments are measured at fair value using a three-level hierarchy, with cash equivalents as **Level 1** and other short-term instruments approximating fair value - The Company uses a **three-level fair value hierarchy**, prioritizing observable inputs[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - Cash equivalents, primarily money market funds, are classified as **Level 1** due to valuation using quoted prices in active markets[43](index=43&type=chunk) - Carrying amounts of short-term financial instruments approximate fair value due to their maturity or market-rate interest[44](index=44&type=chunk)[45](index=45&type=chunk) [Note 5 – Inventory](index=12&type=section&id=Note%205%20%E2%80%93%20Inventory) Inventory is valued at the lower of cost or net realizable value using **FIFO**, decreasing from **$2,615 thousand** to **$2,237 thousand** by June 30, 2025 - Inventory is valued at the lower of cost or net realizable value using the **first-in, first-out (FIFO) method**[46](index=46&type=chunk) Inventory Components (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Finished goods | $1,979 | $2,261 | | Raw materials | $258 | $354 | | **Total inventory** | **$2,237** | **$2,615** | [Note 6 – Intangible Assets and Goodwill](index=12&type=section&id=Note%206%20%E2%80%93%20Intangible%20Assets%20and%20Goodwill) Intangible assets, mainly customer relationships, totaled **$334 thousand** with **$8 thousand** amortization, while goodwill remained at **$0.8 million** with no impairment Intangible Assets (in thousands) | Category | June 30, 2025 Net | December 31, 2024 Net | | :------------------- | :---------------- | :-------------------- | | Customer relationships | $334 | $349 | | Total intangible assets | $334 | $349 | - Amortization expense for intangible assets was approximately **$8 thousand** for both Q2 2025 and Q2 2024[47](index=47&type=chunk) - Goodwill maintained a carrying value of approximately **$0.8 million** at June 30, 2025, and December 31, 2024, with no impairment recorded[31](index=31&type=chunk)[49](index=49&type=chunk) [Note 7 – License and Supply Agreement, net](index=13&type=section&id=Note%207%20%E2%80%93%20License%20and%20Supply%20Agreement%2C%20net) Nephros holds an exclusive License and Supply Agreement with Medica S.p.A. until 2028, with a net intangible asset value of **$0.2 million** and **$14 thousand** quarterly amortization - The Company holds an **exclusive License and Supply Agreement with Medica S.p.A.** for filtration products, extended until **December 31, 2028**[50](index=50&type=chunk) Minimum Annual Purchase Commitments to Medica S.p.A. | Year | Minimum Purchase (Euros) | | :--- | :----------------------- | | 2025 | €4,629,000 | | 2026 | €4,976,000 | | 2027 | €5,349,000 | | 2028 | €5,750,000 | - The capitalized intangible asset for the license had a gross value of **$2.3 million**, a net value of **$0.2 million**, and accumulated amortization of **$2.1 million** as of June 30, 2025[52](index=52&type=chunk) - Amortization expense for the license and supply agreement was approximately **$14 thousand** for both Q2 2025 and 2024[52](index=52&type=chunk) [Note 8 – Leases](index=13&type=section&id=Note%208%20%E2%80%93%20Leases) Nephros holds operating leases for offices and equipment, with total lease costs decreasing to **$114 thousand** in Q2 2025 and operating lease liabilities at **$1.222 million** - The Company holds operating leases for corporate offices and equipment with remaining terms of **2.4 to 3.4 years**[54](index=54&type=chunk) Total Lease Costs (in thousands) | Period | June 30, 2025 | June 30, 2024 | | :----------------------- | :------------ | :------------ | | Three months ended | $114 | $144 | | Six months ended | $233 | $283 | Lease Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------------------- | :------------ | :---------------- | | Total operating lease liabilities | $1,222 | $1,389 | | Total finance lease liabilities | $19 | $22 | [Note 9 – Stock Plans and Share-Based Payments](index=15&type=section&id=Note%209%20%E2%80%93%20Stock%20Plans%20and%20Share-Based%20Payments) Stock-based compensation expense significantly increased to **$71 thousand** in Q2 2025, with **205,075 stock options** granted and **$481 thousand** unrecognized expense remaining - The Company granted **205,075 stock options** in H1 2025 with a fair value of approximately **$0.2 million**[58](index=58&type=chunk)[59](index=59&type=chunk) Stock-Based Compensation Expense (Stock Options, in thousands) | Period | June 30, 2025 | June 30, 2024 | | :----------------------- | :------------ | :------------ | | Three months ended | $71 | $28 | | Six months ended | $137 | $11 | - As of June 30, 2025, **$481 thousand** of unrecognized compensation expense for unvested awards remains, to be amortized over **2.3 years**[62](index=62&type=chunk) [Note 10 – Segment Information](index=16&type=section&id=Note%2010%20%E2%80%93%20Segment%20Information) Nephros operates as a **single operating segment**, with the CEO managing activities and using net income (loss) for performance measurement and resource allocation - The Company operates in **one operating segment**, focused on high-performance water solutions for medical and commercial markets[66](index=66&type=chunk) - The Chief Executive Officer (CODM) manages the business as a **single segment**, using **net income (loss)** to measure performance and allocate resources[67](index=67&type=chunk) [Note 11 – Net Income (Loss) per Common Share](index=17&type=section&id=Note%2011%20%E2%80%93%20Net%20Income%20(Loss)%20per%20Common%20Share) Basic and diluted net income per common share improved to **$0.02** in Q2 2025 and **$0.07** in H1 2025, reversing prior year losses Net Income (Loss) per Common Share | (In thousands, except share and per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $237 | $(289) | $795 | $(458) | | Basic weighted average common shares outstanding | 10,600,409 | 10,509,937 | 10,600,379 | 10,505,833 | | Diluted weighted average common shares outstanding | 10,813,028 | 10,509,937 | 10,691,881 | 10,505,833 | | Income (loss) per common share: Basic | $0.02 | $(0.03) | $0.07 | $(0.04) | | Income (loss) per common share: Diluted | $0.02 | $(0.03) | $0.07 | $(0.04) | - As of June 30, 2025, **1,333,896 shares** underlying options were excluded from diluted EPS as they were antidilutive[70](index=70&type=chunk) [Note 12 – Subsequent Events](index=17&type=section&id=Note%2012%20%E2%80%93%20Subsequent%20Events) The **One Big Beautiful Bill Act (OBBBA)** was enacted on July 4, 2025, with its financial impact expected to be immaterial - The **One Big Beautiful Bill Act (OBBBA)** was enacted on July 4, 2025, extending certain Tax Cuts and Jobs Act provisions and modifying international tax frameworks[71](index=71&type=chunk) - The Company is assessing the OBBBA's impact on its financial statements, expecting it to be **immaterial**[71](index=71&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses Nephros, Inc.'s financial condition and operational results for Q2 and H1 2025, highlighting significant improvements in profitability and cash flow [Business Overview](index=18&type=section&id=Business%20Overview) Nephros is a commercial-stage company specializing in **FDA 510(k)-cleared** medical-grade and commercial high-performance water filtration solutions - Nephros is a commercial-stage company focused on developing and marketing **high-performance water filtration solutions**, primarily medical-grade[73](index=73&type=chunk) - The company's portfolio includes **FDA 510(k)-cleared Class II medical devices** for infection control and dialysis water, targeting waterborne pathogens and biological contaminants[73](index=73&type=chunk) - Nephros also offers commercial water filters to improve taste, reduce biofilm, scale, and remove contaminants for **hospitality and food service**[74](index=74&type=chunk) [Our Products](index=18&type=section&id=Our%20Products) Nephros's medical products use **polysulfone hollow fiber** for pathogen elimination, while commercial products use **carbon-based absorption** for water quality improvement - In medical markets, Nephros's filtration uses **polysulfone hollow fiber** technology, effectively eliminating waterborne pathogens and viruses with high flow rates[76](index=76&type=chunk) - Medical market sales are primarily conducted through **distributors (VARs)** and a direct salesforce targeting hospitals and dialysis markets[77](index=77&type=chunk) - Commercial market filters use **carbon-based absorption** to improve water quality for food service and hospitality, sold via direct and indirect channels[78](index=78&type=chunk)[79](index=79&type=chunk) [Target Markets](index=19&type=section&id=Target%20Markets) Nephros targets medical markets for infection control and dialysis, with a growing focus on commercial markets, anticipating future revenue growth and expanded water safety management programs - Nephros filters are used in hospitals and healthcare facilities for protection against waterborne pathogens, with **FDA 510(k) clearance** for medical device products[80](index=80&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) - CMS regulations, updated in January 2022, require healthcare facilities to implement **formal water management plans (WMPs)**, expected to boost HAI-inhibiting ultrafilter sales[82](index=82&type=chunk) - Nephros ultrafiltration products are critical in the dialysis water market for filtering water and bicarbonate concentrate, protecting against bacteria, viruses, and endotoxins[86](index=86&type=chunk)[88](index=88&type=chunk)[92](index=92&type=chunk) - The Company ended its exclusive distribution with Donastar in September 2024 to expand commercial market distribution, anticipating **significant future revenue growth** potentially surpassing infection control revenue[89](index=89&type=chunk)[91](index=91&type=chunk) [Critical Accounting Policies](index=21&type=section&id=Critical%20Accounting%20Policies) No significant changes occurred in critical accounting policies for H1 2025, with revenue recognition for product sales and other agreements remaining consistent with **ASC 606** - No significant changes to critical accounting policies occurred for the six months ended June 30, 2025[94](index=94&type=chunk) - A majority of revenue from product sales is recognized at a **point-in-time upon shipment**, net of variable consideration[95](index=95&type=chunk) - Revenue from royalty, service, and other agreements follows the **ASC 606 five-step model**, allocating transaction prices for multiple deliverables based on relative standalone selling prices[96](index=96&type=chunk)[98](index=98&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Nephros achieved significant improvements in Q2 and H1 2025 operating results, with **revenue growth of 36-37%**, improved gross margins, and a shift to positive operating and net income - Operating results have fluctuated significantly and period-to-period comparisons are not necessarily indicative of future performance[101](index=101&type=chunk) Three Months Ended June 30, 2025 vs. 2024 (in thousands, except percentages) | Metric | 2025 | 2024 | Increase (Decrease) | % Increase (Decrease) | | :-------------------------------- | :----- | :----- | :------------------ | :-------------------- | | Total net revenues | $4,419 | $3,252 | $1,167 | 36% | | Gross margin | $2,795 | $1,912 | $883 | 46% | | Gross margin % | 63% | 59% | - | 4% | | Selling, general and administrative expense | $2,201 | $1,941 | $260 | 13% | | Research and development expense | $311 | $254 | $57 | 22% | | Operating income (loss) | $248 | $(317) | $565 | 178% | | Net income (loss) | $237 | $(289) | $526 | 182% | Six Months Ended June 30, 2025 vs. 2024 (in thousands, except percentages) | Metric | 2025 | 2024 | Increase (Decrease) | % Increase (Decrease) | | :-------------------------------- | :----- | :----- | :------------------ | :-------------------- | | Total net revenues | $9,296 | $6,774 | $2,522 | 37% | | Gross margin | $5,949 | $4,099 | $1,850 | 45% | | Gross margin % | 64% | 61% | - | 3% | | Selling, general and administrative expense | $4,455 | $4,083 | $372 | 9% | | Research and development expense | $606 | $466 | $140 | 30% | | Operating income (loss) | $814 | $(517) | $1,331 | 257% | | Net income (loss) | $795 | $(458) | $1,253 | 274% | - Other income (expense), net, shifted from income in 2024 to expense in 2025 for both periods, primarily due to **foreign currency transaction losses**[109](index=109&type=chunk)[117](index=117&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, Nephros had **$5.074 million** in cash and **$7.806 million** in working capital, generating **$1.3 million** in operating cash flow for H1 2025 Liquidity and Capital Resources (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Cash and cash equivalents | $5,074 | $3,760 | | Other current assets | $4,504 | $4,538 | | Working capital | $7,806 | $6,736 | | Stockholders' equity | $9,599 | $8,585 | - Net cash provided by operating activities was **$1.3 million** for H1 2025, a significant improvement from **$1.2 million** cash used in H1 2024[122](index=122&type=chunk) - Current cash balances are deemed sufficient for the next 12 months, though discretionary expenditures may be reduced if operating results fall short[120](index=120&type=chunk) [Off-Balance Sheet Arrangements](index=25&type=section&id=Off-Balance%20Sheet%20Arrangements) As of June 30, 2025, the Company had no off-balance sheet arrangements - The Company had no off-balance sheet arrangements as of **June 30, 2025**[123](index=123&type=chunk) [Forward-Looking Statements](index=25&type=section&id=Forward-Looking%20Statements) Forward-looking statements are subject to various risks and uncertainties, with actual results potentially differing materially due to market, regulatory, and operational factors - Forward-looking statements are subject to various known and unknown risks and uncertainties, with actual results potentially differing materially from expectations[124](index=124&type=chunk) - Key risk factors include market acceptance, product liabilities, regulatory compliance, funding, marketing effectiveness, competitive pricing, supplier issues, supply chain disruptions, internal control deficiencies, regulatory approvals, patent protection, and sales growth[125](index=125&type=chunk)[126](index=126&type=chunk)[133](index=133&type=chunk) - Investors should consult the Company's **SEC filings**, including the Annual Report on Form 10-K for December 31, 2024, for detailed risk factors[127](index=127&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a smaller reporting company, Nephros is not required to provide quantitative and qualitative market risk disclosures - The Company is not required to provide disclosure for this item as it is a **smaller reporting company**[128](index=128&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management maintains disclosure controls, actively remediating a material weakness in internal control over financial reporting related to **ASC 606** revenue recognition for multiple deliverables - The Company maintains disclosure controls and procedures to ensure timely communication of required information to management[129](index=129&type=chunk) - A material weakness in internal control over financial reporting was identified, related to **ASC 606** revenue recognition for contracts with multiple deliverables and transaction price allocation[130](index=130&type=chunk) - Remediation efforts include new controls, processes for standalone pricing, and sales team training; the material weakness did not result in any material misstatement[130](index=130&type=chunk)[131](index=131&type=chunk) PART II - OTHER INFORMATION [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Nephros is not required to provide new risk factor disclosures, directing investors to prior **Form 10-K** and **10-Q** filings - As a **smaller reporting company**, Nephros is not required to provide disclosure for this item[135](index=135&type=chunk) - Investors should consult the **Annual Report on Form 10-K** for December 31, 2024, and the **Quarterly Report on Form 10-Q** for March 31, 2025, for detailed risk factors[135](index=135&type=chunk) [Item 5. Other Information](index=27&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated **Rule 10b5-1** or non-Rule 10b5-1 trading arrangements during Q2 2025 - None of the Company's directors or officers adopted or terminated a **Rule 10b5-1** or non-Rule 10b5-1 trading arrangement during Q2 2025[136](index=136&type=chunk) [Item 6. Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the **Form 10-Q**, including **SOX 302 and 906** certifications and **Inline XBRL** documents - Exhibits include **CEO and CFO certifications** pursuant to **Sections 302 and 906 of the Sarbanes-Oxley Act of 2002**[138](index=138&type=chunk) - The filing also includes various **Inline XBRL** documents, such as Instance, Taxonomy Extension Schema, and Linkbase documents[138](index=138&type=chunk) [Signatures](index=28&type=section&id=SIGNATURES) The report was signed on **August 7, 2025**, by Robert Banks, President and CEO, and Judy Krandel, CFO, per the Securities Exchange Act of 1934 - The report was signed on **August 7, 2025**, by Robert Banks, President and CEO, and Judy Krandel, CFO[141](index=141&type=chunk)

Core Viewpoint - Nephros, Inc. is set to announce its second-quarter financial results on August 7, 2025, followed by a conference call to discuss these results [1]. Group 1: Financial Results Announcement - Nephros will file its second-quarter financial results after market close on August 7, 2025 [1]. - A conference call is scheduled for the same day at 4:30 pm ET to discuss the financial results [1]. Group 2: Conference Call Details - Participants can join the call via domestic access at 1 (844) 808-7106 and international access at 1 (412) 317-5285 [2]. - An audio archive of the call will be available shortly after the event on the Nephros Investor Relations page [2]. - A replay of the call can be accessed until August 15, 2025, using specific access codes for domestic and international callers [2]. Group 3: Company Overview - Nephros is focused on enhancing the human relationship with water through innovative filtration technology [3]. - The company provides water filtration products and services, along with water-quality education, targeting both medical and commercial markets [3]. - Nephros offers proactive and emergency solutions for water management [3].

Upon joining, please ask to be joined into the Nephros conference call. An audio archive of the call will be available shortly after the call on the Nephros Investor Relations page. Alternatively, a replay of the call may be accessed until August 15th, 2025, at 1 (877) 344-7529 or 1 (412) 317-0088 for international callers and entering replay access code: 6362809. About Nephros Nephros is committed to improving the human relationship with water through leading, accessible technology. We provide innovative w ...

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed interim financial statements and management's analysis [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited).) This section presents Nephros, Inc.'s unaudited condensed interim financial statements and related notes for Q1 2025 and 2024 [Condensed Balance Sheets](index=4&type=section&id=CONDENSED%20BALANCE%20SHEETS%20%E2%80%93%20March%2031%2C%202025%20and%20December%2031%2C%202024) This section provides a snapshot of the company's financial position at March 31, 2025, and December 31, 2024 **Condensed Balance Sheet Highlights (in thousands):** | Metric | March 31, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------- | :---------------- | :----- | :------- | | Total Assets | $11,778 | $11,210 | $568 | 5.07% | | Total Liabilities | $2,487 | $2,625 | $(138) | -5.26% | | Total Stockholders' Equity | $9,291 | $8,585 | $706 | 8.22% | | Cash and cash equivalents | $4,081 | $3,760 | $321 | 8.54% | | Accounts receivable, net | $2,677 | $1,781 | $896 | 50.31% | | Inventory | $1,954 | $2,615 | $(661) | -25.28% | [Condensed Statements of Operations](index=5&type=section&id=CONDENSED%20STATEMENTS%20OF%20OPERATIONS%20%E2%80%93%20Three%20months%20ended%20March%2031%2C%202025%20and%202024) This section details the company's financial performance for the three months ended March 31, 2025 and 2024 **Condensed Statements of Operations Highlights (in thousands, except per share):** | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Total net revenues | $4,877 | $3,522 | $1,355 | 38.47% | | Gross margin | $3,154 | $2,187 | $967 | 44.22% | | Operating income (loss) | $566 | $(200) | $766 | 383.00% | | Net income (loss) | $558 | $(169) | $727 | -430.18% | | Net income (loss) per common share, basic | $0.05 | $(0.02) | $0.07 | -350.00% | | Net income (loss) per common share, diluted | $0.05 | $(0.02) | $0.07 | -350.00% | [Condensed Statements of Changes in Stockholders' Equity](index=6&type=section&id=CONDENSED%20STATEMENTS%20OF%20CHANGES%20IN%20STOCKHOLDERS'%20EQUITY%20%E2%80%93%20Three%20months%20ended%20March%2031%2C%202025%20and%202024) This section outlines changes in stockholders' equity for the three months ended March 31, 2025 and 2024 **Changes in Stockholders' Equity (in thousands):** | Item | Three Months Ended March 31, 2025 | | :------------------------ | :-------------------------------- | | Balance, December 31, 2024 | $8,585 | | Net Income | $558 | | Issuance of vested restricted stock | $82 | | Stock-based compensation | $66 | | Balance, March 31, 2025 | $9,291 | [Condensed Statements of Cash Flows](index=7&type=section&id=CONDENSED%20STATEMENTS%20OF%20CASH%20FLOWS%20%E2%80%93%20Three%20months%20ended%20March%2031%2C%202025%20and%202024) This section presents the cash inflows and outflows for the three months ended March 31, 2025 and 2024 **Condensed Statements of Cash Flows Highlights (in thousands):** | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) | $558 | $(169) | | Net cash provided by (used in) operating activities | $322 | $(672) | | Net cash used in financing activities | $(1) | $(2) | | Net increase (decrease) in cash and cash equivalents | $321 | $(674) | | Cash and cash equivalents, end of period | $4,081 | $3,633 | [Notes to Condensed Interim Financial Statements](index=8&type=section&id=NOTES%20TO%20CONDENSED%20INTERIM%20FINANCIAL%20STATEMENTS) This section provides detailed explanations of the company's accounting policies and financial statement items [Note 1 – Organization and Nature of Operations](index=8&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20Nature%20of%20Operations) This note describes Nephros, Inc.'s incorporation and its core business in liquid purification filters - Nephros, Inc. was incorporated on April 3, 1997, and specializes in high-performance liquid purification filters for medical markets (hospitals, dialysis centers) to prevent waterborne pathogens, as well as water filtration products for commercial applications (hospitality, food service)[19](index=19&type=chunk)[20](index=20&type=chunk) [Note 2 – Basis of Presentation and Liquidity](index=8&type=section&id=Note%202%20%E2%80%93%20Basis%20of%20Presentation%20and%20Liquidity) This note explains the basis of financial statement preparation and assesses the company's liquidity position - The interim financial statements are unaudited and prepared in accordance with GAAP for interim financial information. The company generated net income and positive cash from operations in Q1 2025, and believes its current cash balances are sufficient to fund operations for at least the next 12 months, despite an accumulated deficit of **$143.8 million** as of March 31, 2025[22](index=22&type=chunk)[26](index=26&type=chunk) **Major Customers' Contribution to Revenue and Accounts Receivable:** | Customer | 2025 Revenue % | 2024 Revenue % | 2025 A/R % | 2024 A/R % | | :------- | :------------- | :------------- | :--------- | :--------- | | A | 19% | 31% | 8% | 13% | | B | 11% | 7% | 12% | 4% | | Total | 30% | 38% | 20% | 17% | [Note 3 – Revenue Recognition](index=10&type=section&id=Note%203%20%E2%80%93%20Revenue%20Recognition) This note details the company's policies for recognizing revenue from product sales, royalties, and services - Product revenue is recognized at a point-in-time upon shipment, net of variable consideration. Royalty and service revenues are recognized in accordance with the five-step model in ASC 606, with royalty revenue increasing significantly from **$16k** in Q1 2024 to **$171k** in Q1 2025[33](index=33&type=chunk)[34](index=34&type=chunk)[36](index=36&type=chunk) [Note 4 – Fair Value Measurements](index=10&type=section&id=Note%204%20%E2%80%93%20Fair%20Value%20Measurements) This note outlines the company's fair value hierarchy and valuation methods for financial instruments - The company uses a three-level fair value hierarchy. Cash equivalents, primarily money market funds, are classified as Level 1, valued at **$2,779k** as of March 31, 2025, and **$1,866k** as of December 31, 2024[39](index=39&type=chunk)[43](index=43&type=chunk) [Note 5 – Inventory](index=12&type=section&id=Note%205%20%E2%80%93%20Inventory) This note provides a breakdown of the company's inventory components and their valuation **Inventory Components (in thousands):** | Item | March 31, 2025 | December 31, 2024 | | :------------- | :------------- | :---------------- | | Finished goods | $1,626 | $2,261 | | Raw materials | $328 | $354 | | Total inventory | $1,954 | $2,615 | [Note 6 – Intangible Assets and Goodwill](index=12&type=section&id=Note%206%20%E2%80%93%20Intangible%20Assets%20and%20Goodwill) This note details the company's intangible assets and goodwill, including amortization and impairment **Intangible Assets (in thousands):** | Item | March 31, 2025 (Net) | December 31, 2024 (Net) | | :-------------------- | :------------------- | :---------------------- | | Customer relationships | $341 | $349 | | Total intangible assets | $341 | $349 | **Goodwill (in thousands):** | Item | March 31, 2025 | December 31, 2024 | | :------- | :------------- | :---------------- | | Goodwill | $759 | $759 | - Amortization expense for intangible assets was approximately **$8k** for both Q1 2025 and Q1 2024. No goodwill impairment was recorded for the three months ended March 31, 2025 and 2024[47](index=47&type=chunk)[32](index=32&type=chunk) [Note 7 – License and Supply Agreement, net](index=12&type=section&id=Note%207%20%E2%80%93%20License%20and%20Supply%20Agreement%2C%20net) This note describes the exclusive license and supply agreement with Medica S.p.A. and related commitments - Nephros has an exclusive License and Supply Agreement with Medica S.p.A., its sole supplier for certain filter materials, extended until December 31, 2028. The agreement includes minimum annual aggregate purchase commitments, with failure to meet them potentially leading to termination[50](index=50&type=chunk)[51](index=51&type=chunk) **Minimum Annual Purchase Commitments (in thousands of Euros):** | Year | Amount | | :--- | :----- | | 2025 | €4,629 | | 2026 | €4,976 | | 2027 | €5,349 | | 2028 | €5,750 | - The capitalized intangible asset for the license has a gross value of **$2.3 million**, with a net value of **$0.2 million** as of March 31, 2025. Amortization expense was approximately **$14k** for both Q1 2025 and Q1 2024[52](index=52&type=chunk) [Note 8 – Leases](index=13&type=section&id=Note%208%20%E2%80%93%20Leases) This note provides information on the company's operating leases, including right-of-use assets and liabilities - The company holds operating leases for corporate offices and office equipment, with remaining terms of 3 to 4 years. Total lease cost decreased to **$119k** in Q1 2025 from **$139k** in Q1 2024[54](index=54&type=chunk)[55](index=55&type=chunk) **Lease Liabilities and ROU Assets (in thousands):** | Item | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Operating lease right-of-use assets | $1,269 | $1,355 | | Total operating lease liabilities | $1,306 | $1,389 | | Weighted average remaining lease term (Operating) | 3.3 years | 3.6 years | | Weighted average discount rate (Operating) | 8.0% | 8.0% | [Note 9 – Stock Plans and Share-Based Payments](index=14&type=section&id=Note%209%20%E2%80%93%20Stock%20Plans%20and%20Share-Based%20Payments) This note details the company's stock option and restricted stock plans and related compensation expenses - Nephros granted **204,575** stock options in Q1 2025 with a fair value of approximately **$0.2 million**. Stock-based compensation expense for stock options was **$66k** in Q1 2025 (vs. **$(17)k** in Q1 2024) and for restricted stock was **$10k** in Q1 2025 (vs. **$8k** in Q1 2024)[58](index=58&type=chunk)[62](index=62&type=chunk)[64](index=64&type=chunk) - As of March 31, 2025, there was **$564k** of unrecognized compensation expense related to unvested stock-based awards, to be amortized over a weighted average remaining service period of **2.5 years**[63](index=63&type=chunk) [Note 10 – Segment Information](index=16&type=section&id=Note%2010%20%E2%80%93%20Segment%20Information) This note clarifies that the company operates as a single reportable segment focused on water solutions - The company operates as a single operating and reportable segment, focusing on high-performance water solutions for medical and commercial markets. The CEO, as the Chief Operating Decision Maker, evaluates performance based on net income (loss)[67](index=67&type=chunk)[68](index=68&type=chunk) [Note 11 – Net Income (Loss) per Common Share](index=16&type=section&id=Note%2011%20%E2%80%93%20Net%20Income%20(Loss)%20per%20Common%20Share) This note presents the calculation of basic and diluted net income (loss) per common share **Net Income (Loss) per Common Share (in thousands, except per share data):** | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) | $558 | $(169) | | Basic weighted average common shares outstanding | 10,600,350 | 10,501,771 | | Diluted weighted average common shares outstanding | 10,615,766 | 10,501,771 | | Basic EPS | $0.05 | $(0.02) | | Diluted EPS | $0.05 | $(0.02) | - Potentially dilutive securities, including **1,438,706** shares underlying options outstanding as of March 31, 2025, were excluded from diluted EPS computation as they were antidilutive[72](index=72&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's perspective on the company's financial condition and operational results for Q1 2025 [Business Overview](index=18&type=section&id=Business%20Overview) This section provides an overview of Nephros's business, products, and target markets - Nephros is a commercial-stage company specializing in FDA 510(k)-cleared medical-grade water filtration solutions for infection control and dialysis, and also offers commercial water filters for taste, odor, and contaminant reduction across various industries[74](index=74&type=chunk)[75](index=75&type=chunk) [Our Products](index=19&type=section&id=Our%20Products) This section describes the company's medical and commercial water filtration products and their technologies - Medical products utilize polysulfone hollow fiber technology for effective pathogen elimination and high flow rates, primarily sold through distributors (VARs) and a direct salesforce. Commercial products use carbon-based absorption to improve water quality, sold through both direct and indirect channels[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) [Target Markets](index=19&type=section&id=Target%20Markets) This section identifies the key markets for Nephros's products, including healthcare and commercial facilities - Nephros targets hospitals and healthcare facilities for infection control, dialysis centers for water/bicarbonate filtration, and commercial/industrial facilities (hotels, restaurants, convenience stores) for general water purification[82](index=82&type=chunk)[84](index=84&type=chunk)[87](index=87&type=chunk)[91](index=91&type=chunk) - CMS regulations requiring formal water management plans (WMPs) in healthcare facilities are expected to positively impact sales of HAI-inhibiting ultrafilters. The company anticipates significant future revenue growth in commercial markets, potentially surpassing infection control revenue, driven by increasing water safety awareness and ASHRAE-188 guidelines[85](index=85&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) - The company ended its exclusive distribution relationship with Donastar in September 2024 to expand commercial market distribution and pursue other national accounts[92](index=92&type=chunk) [Critical Accounting Policies](index=21&type=section&id=Critical%20Accounting%20Policies) This section discusses the significant accounting policies, particularly revenue recognition, used in financial reporting - No significant changes to critical accounting policies were noted for Q1 2025, other than details on revenue recognition. Product revenue is recognized upon shipment, while royalty and service revenues follow the ASC 606 five-step model, with transaction prices allocated based on standalone selling prices[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[102](index=102&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenue, gross margin, and net income **Results of Operations Highlights (in thousands, except percentages):** | Metric | 2025 | 2024 | $ Increase (Decrease) | % Increase (Decrease) | | :-------------------------------- | :----- | :----- | :-------------------- | :-------------------- | | Total net revenue | $4,877 | $3,522 | $1,355 | 38% | | Cost of goods sold | $1,723 | $1,335 | $388 | 29% | | Gross margin | $3,154 | $2,187 | $967 | 44% | | Gross margin % | 65% | 62% | - | 3% | | Selling, general and administrative expense | $2,254 | $2,142 | $112 | 5% | | Research and development expense | $295 | $212 | $83 | 39% | | Depreciation and amortization expense | $39 | $33 | $6 | 18% | | Operating Income (loss) | $566 | $(200) | $766 | 383% | | Interest expense | $- | $(1) | $1 | 100% | | Interest income | $13 | $25 | $(12) | (48)% | | Other (expense) income, net | $(21) | $7 | $(28) | (400)% | | Net Income (loss) | $558 | $(169) | $727 | (430)% | - Net revenue increased by **38%** due to strong reorders, new active sites, pre-ordering ahead of a price increase, and stronger emergency response sales. Gross profit margin improved by **3 percentage points** to **65%** due to a favorable product mix, price increase, and lower inventory reserves/write-offs[106](index=106&type=chunk)[107](index=107&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its short-term and long-term financial obligations **Liquidity and Capital Resources (in thousands):** | Metric | March 31, 2025 | December 31, 2024 | | :------------------------ | :------------- | :---------------- | | Cash and cash equivalents | $4,081 | $3,760 | | Other current assets | $4,911 | $4,538 | | Working capital | $7,474 | $6,736 | | Stockholders' equity | $9,291 | $8,585 | - Net cash provided by operating activities was approximately **$0.3 million** for Q1 2025, a significant improvement from **$0.7 million** used in Q1 2024, primarily due to net income and a decrease in inventory, offset by an increase in accounts receivable[118](index=118&type=chunk) - The company believes its current cash balances are sufficient to fund its operating plan through at least the next 12 months, but acknowledges potential future operating losses and the need for cost control if revenue expectations are not met[115](index=115&type=chunk) [Off-Balance Sheet Arrangements](index=25&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any off-balance sheet arrangements as of March 31, 2025 - The company did not have any off-balance sheet arrangements as of March 31, 2025[120](index=120&type=chunk) [Forward-Looking Statements](index=25&type=section&id=Forward-Looking%20Statements) This section highlights the inherent risks and uncertainties associated with forward-looking statements - This section contains forward-looking statements subject to various known and unknown risks and uncertainties, including market acceptance, product liability, regulatory compliance, funding, marketing effectiveness, supplier issues, tariffs, and internal control deficiencies, which could cause actual results to differ materially from expectations[121](index=121&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a smaller reporting company, Nephros, Inc. is exempt from providing detailed market risk disclosures - The company is exempt from providing disclosures on market risk as it qualifies as a smaller reporting company[123](index=123&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that disclosure controls were ineffective due to a material weakness in revenue recognition controls - Disclosure controls and procedures were deemed not effective as of March 31, 2025[125](index=125&type=chunk) - A material weakness was identified in internal controls over financial reporting concerning revenue recognition from contracts with multiple performance obligations and the application of ASC 606, specifically regarding the allocation of transaction price based on standalone selling price[125](index=125&type=chunk)[126](index=126&type=chunk) - This material weakness did not result in any material misstatements in the financial statements for the period presented, but management is working with consultants to establish remediation controls[125](index=125&type=chunk)[126](index=126&type=chunk) [PART II - OTHER INFORMATION](index=27&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section includes additional information such as risk factors, exhibits, and official signatures [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the Annual Report for risk factors and highlights new risks related to tariffs and internal control weaknesses - The company refers to its Annual Report on Form 10-K for a discussion of important risk factors[129](index=129&type=chunk) - New risks include potential material adverse effects from changes in U.S. tariff policies, particularly due to reliance on EU suppliers, which could increase costs and impact revenues and profitability[130](index=130&type=chunk) - The identified material weakness in internal control over financial reporting poses a risk that could adversely affect investor confidence and the value of common stock if not remediated[131](index=131&type=chunk)[132](index=132&type=chunk) [Item 5. Exhibits](index=27&type=section&id=Item%205.%20Exhibits) This section lists all supplementary documents and certifications filed with the Form 10-Q - Exhibits include certifications by the CEO and CFO (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act), Inline XBRL documents, and an Amendment to Letter Agreement with Judy Krandel[135](index=135&type=chunk)[136](index=136&type=chunk) [SIGNATURES](index=29&type=section&id=SIGNATURES) This section contains the official signatures of the company's principal executive and financial officers - The report was signed on May 15, 2025, by Robert Banks (President, Chief Executive Officer) and Judy Krandel (Chief Financial Officer)[139](index=139&type=chunk)

[Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) [Overview of Q1 2025 Results](index=1&type=section&id=Overview%20of%20Q1%202025%20Results) Nephros reported a strong Q1 2025 with record quarterly net revenue of $4.9 million, representing a 38% increase year-over-year. The company achieved a net income of $558,000, a significant turnaround from a net loss in the prior year, and an improved gross margin of 65% | Metric | Q1 2025 | Q1 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Net Revenue | $4.9 million | $3.5 million | +38% | | Net Income | $558,000 | ($169,000) | Turnaround from loss | | Adjusted EBITDA | $667,000 | ($95,000) | Turnaround from loss | | Gross Margin | 65% | 62% | +3 percentage points | [CEO Commentary and Business Outlook](index=1&type=section&id=CEO%20Commentary%20and%20Business%20Outlook) CEO Robert Banks highlighted record quarterly net revenue driven by robust growth in both core programmatic and emergency response businesses, reflecting improved reorder rates and product value. While emergency business saw a peak, the company will focus on its core programmatic business. Nephros is well-positioned with long-term customers and strong margins, planning new product launches and capability advancements despite macro-economic uncertainties from tariff activity - Record quarterly net revenue of **$4.9M**, characterized by robust growth and all-time highs in both core programmatic business and emergency response business[3](index=3&type=chunk) - Achieved a record high of **1,600 active sites** in Q1, indicating growing market adoption and operational momentum[3](index=3&type=chunk) - Company plans to continue innovation with a pipeline of new product launches and capability advancements to reinforce its market standing[3](index=3&type=chunk) [Detailed Financial Performance Analysis](index=1&type=section&id=Detailed%20Financial%20Performance%20Analysis) [Revenue and Gross Margin](index=1&type=section&id=Revenue%20and%20Gross%20Margin) Net revenue increased by 38% to $4.9 million in Q1 2025, with core programmatic revenue growing 23% year-over-year. Gross margin improved to 65% from 62% in the prior year, primarily due to a price increase, a more favorable product mix, and lower inventory reserves and write-offs | Metric | Q1 2025 | Q1 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Net Revenue | $4.9 million | $3.5 million | +38% | | Core Programmatic Revenue Growth | - | - | +23% | | Gross Margin | 65% | 62% | +3 percentage points | - Increase in programmatic sales reflects strong reorders, a number of new active sites, and pre-ordering ahead of a small price increase implemented in February 2025[4](index=4&type=chunk) - Gross margin increase was primarily driven by a price increase, a more favorable product mix, and lower inventory reserves and write-offs compared to the prior period[8](index=8&type=chunk) [Operating Expenses](index=2&type=section&id=Operating%20Expenses) Operating expenses saw increases across categories. Selling, general and administrative expenses rose 5% to $2.3 million due to higher sales commissions and stock compensation. Research and development expenses increased 39% to $0.3 million, driven by higher headcount | Expense Category | Q1 2025 | Q1 2024 | Change (YoY) | | :--------------- | :------ | :------ | :----------- | | Cost of Goods Sold | $1.7 million | $1.3 million | +29% | | SG&A Expenses | $2.3 million | $2.1 million | +5% | | R&D Expenses | $0.3 million | $0.2 million | +39% | | Depreciation & Amortization | $39,000 | $33,000 | +18.2% | - Selling, general and administrative expenses increased due to higher sales commissions resulting from increased revenue and stock compensation expense[9](index=9&type=chunk) - Research and development expenses increased due to higher headcount[9](index=9&type=chunk) [Net Income and Cash Position](index=2&type=section&id=Net%20Income%20and%20Cash%20Position) Nephros achieved a net income of $0.6 million in Q1 2025, a significant improvement from a net loss of $0.2 million in Q1 2024, marking the second quarterly net income in the company's history. The company maintained a strong cash position, ending the quarter with $4.1 million in cash and cash equivalents and remaining debt-free | Metric | Q1 2025 | Q1 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Net Income (Loss) | $0.6 million | ($0.2 million) | Turnaround from loss | | Cash and Cash Equivalents (as of period end) | $4.1 million | $3.8 million (Dec 31, 2024) | +$0.3 million (QoQ) | - Q1 2025 marks the second quarterly net income in the Company's history[10](index=10&type=chunk) - Nephros remains debt-free as of March 31, 2025[11](index=11&type=chunk) [Non-GAAP Financial Measures](index=2&type=section&id=Non-GAAP%20Financial%20Measures) [Adjusted EBITDA Definition and Reconciliation](index=2&type=section&id=Adjusted%20EBITDA%20Definition%20and%20Reconciliation) Adjusted EBITDA for Q1 2025 was approximately $0.7 million, a substantial improvement from a loss of $0.1 million in Q1 2024. The company defines Adjusted EBITDA by excluding interest, tax, non-recurring expenses, and non-cash items from GAAP net income (loss), providing a detailed reconciliation table | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :----- | :--------------------- | :--------------------- | | Net (loss) income | $558 | ($169) | | Adjustments: | | | | Depreciation of property and equipment | $17 | $11 | | Amortization of other assets | $23 | $23 | | Interest expense | - | $1 | | Interest income | ($13) | ($25) | | Non-cash stock-based compensation | $76 | ($9) | | Non-cash inventory impairments | $6 | $73 | | **Adjusted EBITDA Income (loss)** | **$667** | **($95)** | - Adjusted EBITDA is calculated by taking net income (loss) and excluding all interest-related expenses and income, tax-related expenses and income, non-recurring expenses and income, and non-cash items[12](index=12&type=chunk) [Management's Perspective on Adjusted EBITDA](index=3&type=section&id=Management%27s%20Perspective%20on%20Adjusted%20EBITDA) Management views Adjusted EBITDA as a useful tool for investors and management to understand financial and business trends, but emphasizes it should not be considered in isolation or as an alternative to GAAP measures due to its exclusion of significant expenses and income - Nephros believes Adjusted EBITDA provides useful information to management and investors regarding certain financial and business trends[16](index=16&type=chunk) - Management does not consider Adjusted EBITDA in isolation or as an alternative to financial measures determined in accordance with GAAP[16](index=16&type=chunk) - Investors are urged to review the reconciliation of Adjusted EBITDA to net income (loss) and not to rely on any single financial measure to evaluate the business[16](index=16&type=chunk) [Corporate Information](index=3&type=section&id=Corporate%20Information) [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) Nephros hosted a conference call on May 8, 2025, at 4:30 PM ET to discuss financial results and provide a general business overview. Details for live access and replay options were provided - Nephros hosted a conference call on May 8, 2025, at 4:30 PM ET to discuss financial results and provide a general business overview[17](index=17&type=chunk) - An audio archive of the call is available shortly after the call on the Nephros Investor Relations page, with a replay accessible until May 15th, 2025[19](index=19&type=chunk) [About Nephros](index=3&type=section&id=About%20Nephros) Nephros, Inc. is a water technology company committed to improving the human relationship with water through leading, accessible technology. They provide innovative water filtration products and services, along with water-quality education, serving healthcare and commercial markets with both proactive and emergency solutions for water management - Nephros is a leading water technology company providing innovative water filtration products and services[20](index=20&type=chunk) - Serves the needs of customers within healthcare and commercial markets, offering both proactive and emergency solutions for water management[20](index=20&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) The release contains forward-looking statements regarding future revenue growth, new product offerings, and competitive advantages, which are subject to various risks and uncertainties. These risks include sales organization development, emergency response sales variability, U.S. tariffs, inflationary factors, economic and competitive conditions, capital availability, dependence on third-party manufacturers, and regulatory reforms - Statements regarding Nephros' expected future revenue growth, timing of growth, effect of new regulations, and anticipated impact of new product offerings are forward-looking[23](index=23&type=chunk) - Actual results could differ materially due to factors such as Nephros' ability to develop its sales organization, variability of emergency response sales, U.S. tariffs, inflation, economic conditions, and regulatory reforms[23](index=23&type=chunk) - Nephros does not undertake any responsibility to update any forward-looking statements, except as may be required by law[23](index=23&type=chunk) [Investor Relations Contacts](index=4&type=section&id=Investor%20Relations%20Contacts) Contact information for investor relations is provided, including Kirin Smith, President of PCG Advisory, Inc., and Robert Banks, CEO of Nephros, Inc - Investor Relations contacts include Kirin Smith, President of PCG Advisory, Inc., and Robert Banks, CEO of Nephros, Inc[24](index=24&type=chunk) [Unaudited Financial Statements](index=5&type=section&id=Unaudited%20Financial%20Statements) [Balance Sheets](index=5&type=section&id=Balance%20Sheets) The unaudited balance sheet as of March 31, 2025, shows total assets of $11.778 million, an increase from $11.210 million at December 31, 2024. Total liabilities decreased slightly, while total stockholders' equity increased, reflecting improved financial health | Balance Sheet Item | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------- | :----------------------------- | :------------------------------- | | Cash and cash equivalents | $4,081 | $3,760 | | Total current assets | $8,992 | $8,298 | | TOTAL ASSETS | $11,778 | $11,210 | | Total current liabilities | $1,518 | $1,562 | | TOTAL LIABILITIES | $2,487 | $2,625 | | TOTAL STOCKHOLDERS' EQUITY | $9,291 | $8,585 | [Statements of Operations](index=6&type=section&id=Statements%20of%20Operations) The unaudited statements of operations for the three months ended March 31, 2025, show total net revenues of $4.877 million, up from $3.522 million in the prior year. This led to a net income of $0.558 million, a significant turnaround from a net loss of $0.169 million in Q1 2024, resulting in basic and diluted EPS of $0.05 | Income Statement Item | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :-------------------- | :--------------------- | :--------------------- | | Product revenues | $4,706 | $3,506 | | Royalty and other revenues | $171 | $16 | | Total net revenues | $4,877 | $3,522 | | Cost of goods sold | $1,723 | $1,335 | | Gross margin | $3,154 | $2,187 | | Total operating expenses | $2,588 | $2,387 | | Operating income (loss) | $566 | ($200) | | Net income (loss) | $558 | ($169) | | Net income (loss) per common share, basic | $0.05 | ($0.02) | | Net income (loss) per common share, diluted | $0.05 | ($0.02) |